RAPAPORT...
Consumer Confidence Rebounds
The Conference Board Consumer Confidence Index (CCI), which decreased sharply in August, bounced back in September. Based on a representative sample of 5,000 United States households, the CCI now stands at 104.5 (1985=100), up from 100.2 in August, but still well short of the April 2006 CCI of 109.8, the highest level since May 2002. “A more favorable assessment of current conditions coupled with a less pessimistic short-term outlook boosted consumer confidence (last) month,” commented Lynn Franco, director of The Conference Board’s consumer research center. “However, even though consumers’ concerns have eased, there is little to suggest a significant change in economic activity as we enter the final quarter of 2006.”
CCI survey respondents who feel conditions are “good” improved to 27.4 percent in September from 26.2 percent in August, while those who believe conditions are “bad” eased to 15.4 percent from 16.6 percent. The labor market picture was mixed. A total of 25.9 percent of consumers consider jobs to be “plentiful,” up from 24.5 percent, but those claiming jobs are “hard to get” edged up to 21.3 percent from 21.1 percent. The outlook for the next six months was less gloomy in September than in August, with those consumers anticipating business conditions will worsen declining to 10.6 percent from 12.9 percent. Those expecting business conditions to improve remained virtually unchanged at 16.3 percent.
U.S. Growth SlowsGrowth of the United States economy slowed to 2.6 percent in the second quarter of 2006, reflecting a positive shift in the country’s foreign trade and increased inventory building by businesses. In the first quarter this year, U.S. economic growth came in at 5.6 percent, mainly driven by January’s consumer spending.
Key factors helping to lift growth, according to the U.S. Department of Commerce, included: the value of goods stockpiled in company warehouses, which grew more quickly; and for the first time in a year, the value of imports inching up just 0.6 percent versus 5.1 percent for the value of exports.
Not including the important price hikes from energy or food, inflation rose 2.7 percent during the second quarter compared with 2 percent in the first quarter, while consumer spending increased 2.6 percent in the quarter ended June 30, 2006, down from 4.8 percent in the preceding three-month period.
Businesses cut expenditure by 1.4 percent in the second quarter, in sharp contrast to a spending splurge of 15.6 percent in the first quarter. And business profits, which contribute to the health of the gross domestic product, were almost flat at only 0.3 percent in the second quarter, a long way short of the 14.8 percent from the first quarter.
Economists predicted growth rates for the remaining two quarters of the year will be somewhere between 2 percent and 2.5 percent.
U.S. Polished Imports UpIn July 2006, the value and volume of polished diamond imports to the United States rose 2.4 percent and 2.6 percent, respectively, to $1.51 billion and 1.56 million carats. Also in July, the value of U.S. polished exports eased 0.5 percent to $668 million, even though the overall quantity exported climbed 18.3 percent to 2.19 million carats. In terms of rough, the value of U.S. imports and exports tumbled 49.5 percent and 45 percent, respectively, in July 2006 to $53 million and $27 million, respectively. All comparisons are with July 2005.
India’s Exports Drop
The value of India’s total cut and polished diamond (CPD) exports for August 2006 fell 28 percent to $910 million, according to provisional data from the Gem & Jewellery Export Promotion Council. During the month, India was hit by severe flooding at the cutting and polishing center of Surat, which undoubtedly impacted August CPD exports and will likely do so again for September. Rough diamond imports also dropped in August — by 44 percent to $316 million.
Israel Polished Exports RiseThe value of polished diamond exports from Israel rose 15.7 percent in August 2006 to $522.9 million and the volume of polished exports increased 9.6 percent to 338,105 carats. In the same month, it also imported 7 percent and 1.6 percent more polished diamonds in terms of value and quantity, respectively, for totals of $244.4 million and 227,545 carats.
In addition, Israel’s rough diamond imports for August 2006 were well down, by 57.3 percent and 50.3 percent to $147.5 million and 442,877 carats, respectively, as were its rough diamond exports, which plunged 56.6 percent and 67.9 percent to $133.6 million and 604,456 carats, respectively.
The average unit price Israel paid for its rough diamond imports fell 14 percent to $333 per carat, while the country’s polished diamond exports fetched an average $1,546.58 per carat, up 5.5 percent. Israel’s Ministry of Industry, Trade and Labor provided all figures, and all comparisons are with August 2005.
Belgium Polished Exports DipThe value of Belgium’s polished diamond exports and the quantity of polished diamonds it shipped in August 2006 decreased 3.3 percent and 2 percent to $292.2 million and 321,046 carats, respectively. The country’s polished diamond imports for the same month grew 8.8 percent and 4.8 percent to $577.7 million and 673,956 carats, respectively. All comparisons are with August 2005.
Japan’s Polished Imports HigherThe total cost of Japan’s polished diamond imports increased 6.4 percent in July 2006 versus July 2005 to $92.6 million, with India, Belgium and Israel supplying a combined 81 percent worth of Japan’s polished diamonds for the month, data from the country’s Jewelry Trade Center Incorporated showed. However, for the seven months to the end of July 2006, Japan’s average price of $401.40 per carat for its polished imports was 13 percent less than the average price for the corresponding period last year.
China’s Diamond Imports JumpChina’s diamond imports have grown 31.5 percent in the period between January and August 2006 to $92.84 million, reports the Shanghai Diamond Exchange (SDE), the mainland’s legal channel for the import and export of diamonds through general trade.
Meantime, diamond trading has picked up significantly since China implemented its new lower tax on imports in July, the SDE noted. The monthly average turnover — of $11.6 million — between January and June 2006 more than tripled to $36.6 million for July and August.
Dubai Imports, Exports Grow
According to the statistics department of the Dubai World Trade Center, nonoil trade in Dubai between January and June 2006 rose 8.6 percent to AED150.75 billion ($41 billion). Exports from Dubai surged 55 percent to AED8.5 billion ($2.3 billion) and imports were up 10 percent to AED102.3 billion ($27.85 billion) for the first half of the year, with diamonds, gemstones, precious metals and jewelry accounting for 22 percent of the combined imports and exports total or about $6.5 billion. China nudged out India as the main source of Dubai’s imports, but India was the main source of Dubai’s exports.
S.A. Rough Exports FallThe value and volume of South Africa’s rough diamond exports declined in July 2006 by 13.5 percent and 8 percent to 1.2 billion rand ($157.5 million) and 1.67 million carats, respectively. At 6.47 billion rand ($847.2 million) and 8.96 million carats for the first seven months of 2006, the country’s rough exports are sitting at 9.5 percent in value and 9.6 percent in volume below where they were at the same time last year.
PRECIOUS METALS PRICES
| Date | Gold London PM | Platinum PM | Silver |
| 8/24/06 | 623.75 | 1227.00 | 12.580 |
| 8/25/06 | 621.25 | 1223.00 | 12.400 |
| 9/29/06 | 613.40 | 1216.00 | 12.140 |
| 8/30/06 | 617.75 | 1230.00 | 12.220 |
| 8/31/06 | 623.50 | 1245.00 | 12.600 |
| 9/1/06 | 621.05 | 1241.00 | 12.750 |
| 9/4/06 | 626.75 | 1247.00 | 12.995 |
| 9/5/06 | 637.75 | 1267.00 | 13.150 |
| 9/6/06 | 635.40 | 1268.00 | 12.950 |
| 9/7/06 | 621.50 | 1254.00 | 13.060 |
| 9/8/06 | 610.00 | 1222.00 | 12.290 |
| 9/11/06 | 588.00 | 1199.50 | 11.760 |
| 9/12/06 | 590.70 | 1207.00 | 11.340 |
| 9/13/06 | 589.00 | 1189.00 | 11.000 |
| 9/14/06 | 584.00 | 1188.00 | 11.350 |
| 9/15/06 | 573.60 | 1150.00 | 10.700 |
| 9/18/06 | 580.50 | 1159.00 | 10.970 |
| 9/19/06 | 583.50 | 1160.00 | 10.910 |
| 9/20/06 | 580.25 | 1135.00 | 10.740 |
| 9/21/06 | 578.75 | 1132.00 | 11.020 |
| 9/22/06 | 589.00 | 1153.00 | 11.280 |
| 9/25/06 | 584.75 | 1127.00 | 11.050 |
| 9/26/06 | 591.00 | 1127.00 | 11.110 |
| 9/27/06 | 593.75 | 1140.00 | 11.580 |
Article from the Rapaport Magazine - October 2006. To subscribe click here.